Band-aids for Capitalism? Or Something Completely Different?

 

“The Mondragón Experiment” could be a Robert Ludlum thriller, but it’s actually more interesting than that—at least if you think the current economic crisis creates a teachable moment about what’s wrong with our system and what might work better. 

Mondragón is a town in the Basque region of Spain, and also the home of the Mondragón Corporación Cooperativa (MCC), a corporation with a twist. MCC began in 1943 as a 25-worker factory making cookers and stoves. Today it is a highly diversified corporation (Spain’s seventh largest) with over 100,000 workers, annual sales of US$20 billion, and 65 plants overseas. 

mondragon_corporation

Sounds like any other successful multinational. So what’s the twist? It’s not capitalist.

MCC began as a worker-owned firm, grew as a worker-owned firm, and remains a worker-owned firm. Democratic worker participation is at the root of MCC’s management style. It is a “democratic federation of democratic cooperatives,” in the words of Loyola University Chicago scholar David Schweickart, who writes about “the Mondragón experiment” and what he terms “economic democracy” in the September/October issue of World Watch (see “A New Capitalism—or a New World?”).

 The 2008–09 economic crisis has triggered a lot of talk about the potential for a Green New Deal, and we’ve done our share here at Worldwatch. But one of the striking things about the meltdown—especially in view of the spectacular collapse of markets, the trillions spent on recovery, and the staggering and still mounting human costs—is the lack of discussion of genuine alternatives to capitalism. Maybe most of us believe there really aren’t any, except socialism and Communism—notions that are increasingly anathema, especially in the United States. But economic democracy is neither socialist nor Communist. The government doesn’t own firms, and decisions are made by the people who do: the workers.

 I know, it’s hard to even hear the word “workers” without thinking of the late U.S.S.R., Communism, apparatchiks, and a gloomy cloud of discredited jargon. But economic democracy, in Schweickart’s vision, is radically different. And it’s different in ways that make it both fairer and greener than any other economic system.

Under economic democracy, workers don’t get paid wages, they receive shares of their firm’s profits—a strong motivator for good performance. But such firms generally don’t focus on sheer growth so much, so competition is less intense, thus avoiding the “grow or die” tendency of capitalism. That alone would be kinder to the environment, but there’s another benefit: In economic democracy, investment is also democratized. Investment funds come from redistribution of a tax on each firm’s capital assets, rather than from private investors (“capitalists”). There are no external owners, i.e., shareholders. And because nobody is demanding ever-increasing returns on their investments—and threatening to sell their shares if they don’t get them—the perpetual-expansion impulse of capitalist firms is subverted.

This could all be theoretical pie in the sky—except for Mondragón. Schweickart offers much more detail in his World Watch article and in his books on the topic (e.g., After Capitalism). Maybe it’s time to begin thinking beyond band-aids for the capitalist economy, and consider a system better suited to our times. It’s kind of exciting—even a bit thrilling.

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